A federal judge nullified the controversial settlement in the case of Trump v. IRS in which Trump, in his personal capacity, sought $10 billion in taxpayer funds for the illegal release of his tax returns during his first term. After filing the case, Trump then attempted to “settle” the illicit case by creating a $1.776 billion “Anti-Weaponization” slush fund to funnel money to people who had committed crimes on his behalf. After re-examining the case, the judge found that Trump and his attorneys had colluded to misuse the court system to personally benefit Trump.
Under federal law, a person can bring a civil case against the IRS for the unauthorized disclosure of tax returns, but the fine is either $1,000 for each act of disclosure or an amount equivalent to the actual damages a plaintiff incurred because of the disclosure — nowhere near the $10 billion Trump demanded.
The situation began on January 9, 2026, when Convicted Felon/Sexual Abuser/President Trump and his acting attorney general Todd Blanche, along with other attorneys, filed a lawsuit on Trump’s behalf against the Internal Revenue Service (IRS) that demanded the IRS pay Trump $10 billion in taxpayer funds. Trump claimed he filed the lawsuit to get compensated for damages he claims he suffered after an IRS contractor illegally leaked his tax returns during his first term as president. The lawsuit was the first-ever instance of a president suing an agency that he himself led, making Trump both the plaintiff and defendant in the suit.
Trump was essentially suing himself, but you can’t legally sue yourself because the legal system requires two distinct opposing parties in any lawsuit, and any money going to you in the case would automatically be a conflict of interest.
The lawsuit was as sensational as it was illicit.
The case immediately drew an onslaught of challenges to its validity from observers and legal experts, and on May 18, 2026, Trump’s attorneys asked the Court to dismiss the lawsuit immediately. The court dismissed the suit and closed the case.
As soon as the Court dismissed the suit, Trump’s former personal attorney and current acting head of the Department of Justice (DOJ), Todd Blanche, issued an order (pdf) to have the U.S. Department of the Treasury transfer $1.776 billion in taxpayer funds to a new account Blanche dubbed the “Anti-Weaponization Fund,” to be used to pay criminals and Trump allies who had committed violent acts on his behalf, like the members of the Proud Boys, Three-Percenters and other militia groups who viciously attacked law enforcement officers in the insurrection at the U.S. Capitol on Jan. 6, 2021. Blanche described the newly-created fund as a “settlement” of Trump’s $10 billion lawsuit, but the “settlement” and so-called “Anti-Weaponization” fund were both created outside the purview of the Court, allowing their actions to escape scrutiny by any judge. The fund also violated the Constitutional requirement that Congress appropriate taxpayer funds, not the Executive branch.
Members of Congress dubbed it a “slush fund.”
Blanche also quietly created another document as part of the purported “settlement,” a sweeping, one-page addendum called a “Release of Claims,” dated May 19, 2026, that forever signed away all claims against Trump by the U.S. The Release of Claims says Trump can never be investigated, audited or sued by the U.S. government at any time in the future, period, including by any government agency, like the IRS, DOJ, Treasury Department, etc. The document effectively ended any ongoing audits and investigations of Trump, his family and all of his companies forever, and forfeited the right of the citizens of the United States to ever collect any taxes that Trump or his businesses owe the country. It also waives the government’s right to try to reclaim any money Trump may have stolen from taxpayers.
35 former federal judges call “foul”
After the Trump vs. IRS case was withdrawn and the slush fund announced, a bipartisan group of 35 former federal judges filed a motion (pdf) asking Judge Williams to re-open the case, void its dismissal and investigate whether the parties had “effectuated a fraud upon the Court.”
The judge agreed to re-open the case and found Trump had indeed brought the lawsuit for “an improper purpose — to gain the imprimatur of judicial legitimacy for a ‘settlement’ that had no viable basis in law or fact.”
District Court Judge Kathleen Williams wrote:
“Courts ‘do not engage in the academic pastime of rendering judgments in favor of persons against themselves.’” (From Pg. 16 of the ruling)
From Page 17 of the ruling:
“The Complaint purports to present a controversy between Plaintiffs — President Donald J. Trump, Donald J. Trump Jr., Eric Trump, and the Trump Organization, LLC — and Defendants — the Internal Revenue Service and United States Treasury Department — claiming Defendants caused Plaintiffs reputational and financial harm for which they now seek “at least $10,000,000,000.00.” [$10 billion] At first glance, the Complaint seemingly satisfies Article III by establishing causes of action ‘arising under . . . the laws of the United States[.]’…However, closer examination reveals that a justiciable case or controversy is absent; Plaintiffs and Defendants are not adverse because one party controls this litigation. … In reaching this conclusion, the Court determines that Plaintiffs improperly employed this lawsuit to justify a particular award in this matter—access to taxpayer funds and exemption from audits and other investigations—which was accomplished by leveraging control over Defendants.” [Bold emphasis added.]
From Page 30:
“Indeed, the DOJ seems to have purposefully adopted the strategy of creating a ‘slush fund disguised as a settlement, and then doling the money out to whatever constituency the Executive wants bankrolled.”
Another flaw in the case was that it was filed beyond the statute of limitations.
Judge Williams addressed the situation on Pages 37-38 of her ruling, writing:
Notably, had President Trump (and his then-lawyers Alina Habba and Todd Blanche) brought this lawsuit in a timely fashion while he was a private citizen, this litigation understandably might have been resolved in a 109-day time span. But that is not what happened. Instead, President Trump did not pursue his claims until he once again occupied the White House and had appointed his former lawyer, and the former lawyer of persons who are putative beneficiaries of the “Anti-Weaponization Fund” to prominent positions in the DOJ. These officials then negotiated on behalf of the United States, with his current lawyers, including his former White House Counsel to reach a “settlement.” It is risible to suggest that there was ever
adverseness between the Parties. In dismissing the non-parties’ claims of collusion, Plaintiffs reveal the true position of the Parties and say the quiet part out loud: “Regardless of whether Plaintiffs had ever filed this action, the Government and Plaintiffs still had the power to resolve all disputes between the parties.” (DE 89 at 15). The power to resolve was never a question before this Court. Whether Executive Branch actors can privately agree to give themselves and their former clients blanket immunities and billions of dollars in tax monies for legally undefined grievances was never an issue advanced to this Court. The question is whether the Parties could do so by claiming to be adverse and engaging the legitimacy of a court proceeding. The answer is a resounding “no”: the Lead Plaintiff and the Government are one, a fully realized unitary interest. Because “Plaintiffs have no answer for the fact that the [L]ead Plaintiff, President Trump, directs and controls the Defendants[,]” this “renders this lawsuit non-adversarial, collusive, and jurisdictionally improper.” See DE 94 at 4. And because this fact was so obvious and so insurmountable, the Court finds that this matter was brought for an improper purpose—to gain the imprimatur of judicial legitimacy for a “settlement” that had no viable basis in law or fact. As was observed in another matter brought in this District, “this case is part of Mr. Trump’s pattern of misusing the courts to serve political purposes.”
The judge sanctioned Trump’s attorneys for their misuse of the court system:
On Page 38 of the ruling, the judge wrote:
“Having concluded that this action was presented for an improper purpose, the Court now turns to the question of sanctions.”
Judge Williams invalidated the fake “settlement” that created the so-called Anti-Weaponization Fund and referred Trump attorney Alejandro Brito to the Florida Bar to “determine whether any disciplinary action is appropriate in light of the findings and rulings made in this Order.” She also prohibited the second Trump attorney on the case, Daniel Epstein, from practicing law in Florida for one year, “or until further order of this court.” She also prohibited all parties to the case — attorneys and Trump — from “using, offering, admitting, or citing” any of the provisions of the so-called “settlement” of the case in any “judicial, administrative, regulatory, arbitration, or any other official proceeding as evidence of a ‘settlement’ reached in this matter.”
The judge also ordered the court to mail a copy of her ruling to the State Bar of New York, of which Blanche is a member, and where he has already been slapped with an ethics complaint backed by more than 101 former federal and state judges.
Incredibly, Trump has nominated the ethically-challenged Todd Blanche to head the United States Department of Justice (DOJ) and his confirmation hearing is this morning, before the U.S. Senate. (C-SPAN live stream of the hearings)
The court ruled the parties can’t get around sanctions by simply voluntarily dismissing the suit:
“If the Court allowed the parties to avoid sanctions by dismissing the suit, it would ‘incentiviz[e] them to [further] misuse the judicial process and then moot the violation by voluntarily dismissing the case before the court can act.” [pg. 42]
“This case concerns whether Plaintiffs’ conduct … satisfies Rule 11’s improper purpose standard. The Court concludes that it does. “[Plaintiffs] pursued this lawsuit in bad faith for the improper purpose of dishonestly advancing a political narrative.”
When Trump was asked by a reporter why he was suing the IRS, he wouldn’t answer:
The fraudulent Trump v. IRS case is not the first time Trump has tried to bilk taxpayers out of huge amounts of money to line his own pockets. In October of 2025, Trump filed a lawsuit demanding the U.S. Department of Justice pay him about $230 million for perceived injustices done to him because of investigations into his activities, for example into Russian election tampering in the 2016 election and his unlawful taking of classified documents when he left office in 2021 and storing them at Mar-a-Lago. About that lawsuit, Trump said, “I’m sort of suing myself. I don’t know, how do you settle the lawsuit, I’ll say give me ‘X’ dollars, and I don’t know what to do with the lawsuit. It sort of looks bad, I’m suing myself, right?”